Text/Yang Jianyong

In recent months, Cambrian's performance in the capital market has been quite impressive, with significant gains, not only setting a new all-time high but also surpassing the 200 billion yuan market value threshold. As of November 26, the market value reached 202.8 billion yuan. Of course, while the capital market continues to climb, it is essential to be aware of the significant risks associated with this surge. After all, with the high share price, investors are bound to take profits, leading to large fluctuations.

Cambrian is one of the most popular AI-related stocks in the market. Benefiting from the era of generative AI, the market size of AI chips is growing rapidly, which has enabled Cambrian to make great strides in the capital market.

Overall, with the advent of the generative AI era, all sectors are leveraging the transformative power of generative AI to accelerate their intelligent upgrade. Among them, the billions of parameters in large models consume immense computing power, leading to a surge in demand for computing power. The demand for computing power as the underlying chip capability for large models has also been unleashed.

According to Gartner's report, the global AI chip market is expected to grow to $67.1 billion by 2024 and reach $119.4 billion by 2027.

In contrast to the vast market space and high share price, Cambrian's revenue is less than satisfactory, especially with its persistent losses that remain unimproved.

In the first three quarters of 2024, Cambrian's revenue was 185 million yuan, a year-on-year increase of 27%, but with a loss of 724 million yuan. From 2017 to the present, the cumulative loss has reached 5.6 billion yuan. Moreover, there is still no guarantee of profitability in the coming years.

It is noteworthy that the primary reason for the persistent losses is Cambrian's significant R&D investment to ensure the high-quality iteration of its smart chip products and basic system software platforms, maintaining a technological lead in the competitive market. The cumulative R&D investment in the past four years alone exceeds 5 billion yuan.

High-quality R&D investment is a solid foundation for the long-term development of the chip industry and an indispensable cornerstone supporting Cambrian's future growth. However, the chip sector also includes giants like NVIDIA, Intel, and AMD, with NVIDIA holding a dominant position in the global AI chip market.

NVIDIA plays a crucial role in AI applications across various fields. At the same time, the development of large AI models by various sectors relies heavily on NVIDIA's high-performance chips. Tech giants enhance their AI capabilities by purchasing large quantities of NVIDIA chips. As tech giants embark on a buying spree, market demand for NVIDIA's AI solutions surges, leading to a shortage of chips and doubling of revenue.

It can be said that NVIDIA is the biggest winner in the era of generative AI. In the third quarter of 2024, its revenue was $35.082 billion, a year-on-year increase of 94%, with annual revenue expected to reach $140 billion. Notably, for large model companies, the high operational costs make it difficult to profit from large models. However, NVIDIA is reaping substantial profits, with a net profit of $19.3 billion in the third quarter, a year-on-year increase of 109%. This shows that selling computing power is currently the only profitable AI business.

It should be noted that not only has NVIDIA's revenue doubled, but its performance in the capital market has also been astonishing, with its share price soaring to become the strongest stock. With a market value of $3.33 trillion, NVIDIA, as a leading player in the global computing power market, is favored by investors, driving its share price higher. This reflects investors' optimistic outlook on the commercial prospects of AI.

Benefiting from the generative AI trend, NVIDIA has seized this market opportunity with its dominant position in the GPU field. As various sectors develop large AI models and invest billions to purchase tens of thousands of cards to build AI infrastructure for large models, AI chip manufacturers have become the focus of the market.

In the domestic market, Cambrian, as a star AI chip enterprise, has also made great strides in the capital market, with a market value exceeding 200 billion yuan. Although there is a huge gap in scale, technology, and financial strength compared to chip giants like NVIDIA, Intel, and ARM, Cambrian aims to compete with NVIDIA, fueling investors' imagination about its potential to enhance AI chip technology, compete with international chip manufacturers, and support the domestic AI chip industry.

Finally, large models are currently the most popular hot technology, gradually unleashing the potential demand in the AI market and ushering in a new era of growth. IDC predicts that the global AI market will reach $632 billion by 2028.

As the demand for AI gradually increases, the market size of AI chips is growing rapidly. In particular, general-purpose AI chips are expected to become the mainstream in the future, indicating a promising commercial outlook for high-performance AI chips and servers, creating growth opportunities for AI chip manufacturers.

Yang Jianyong, a Forbes China contributor, expresses personal views for reference only and does not constitute investment advice.